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Malay Mail
20-07-2025
- Business
- Malay Mail
Ballooning household debt in South-east Asia: The deindustrialisation trap in Malaysia — Phar Kim Beng and John Yip
JULY 20 — Rising household debt has become a defining feature of South-east Asia's economic landscape, and nowhere is this more acute than in Malaysia. Once an exemplar of export-driven modernisation, Malaysia now finds the foundation of its prosperity under strain. At the heart of this vulnerability sits a structural transition—from industrial production to consumption-led services—leaving many households with unstable incomes and a mounting reliance on borrowing. Left unchecked, this accelerating debt burden risks stalling broader development and undermining social cohesion The Alarming Numbers The scope of the problem is stark. This loss of stable, well-paying industrial work has coincided with aggressive consumer lending and a rapid normalisation of debt-driven consumption. — Bernama pic By the end of 2021, Malaysia's household debt-to-GDP ratio stood at 89 per cent, the second-highest in South-east Asia—surpassed only by Thailand (89.3 per cent) and far exceeding Singapore (69.7 per cent), Indonesia (17.2 per cent), and the Philippines (9.9 per cent). This means Malaysians shoulder nearly RM1.4 trillion in household debt, with the highest portion in mortgage and car loans (58 per cent and 13 per cent, respectively), followed by personal loans (14 per cent) and credit cards (3 per cent). Why are Malaysian households so leveraged? Structural change, rising living costs, and the ease of consumer credit all play a role. Responsible lending has helped contain system-wide risk, but a large group of over-indebted households—particularly those with high Debt Service Ratios (DSRs)—remains deeply vulnerable. Under stress scenarios, high-DSR borrowers (DSR > 60 per cent) are 5.5 times more likely to default and face financial hardship than those with more prudent debt loads. Why has household debt swelled? 1. The deindustrialisation challenge Malaysia, alongside its neighbours, was once a manufacturing powerhouse, providing stable jobs and income growth for its rising middle class. However, since the 2000s, manufacturing's share of output has steadily declined (from over 30 per cent to below 24 per cent as of 2023). The expansion of the service sector has yet to compensate in terms of job quality or security. As highlighted by the World Bank and others, the shift away from industry has produced only limited increases in high-productivity service sector employment, with many workers landing in unstable, low-wage, or informal jobs. 2. Overconsumption and easy credit This loss of stable, well-paying industrial work has coincided with aggressive consumer lending and a rapid normalisation of debt-driven consumption. Social status and aspirations are increasingly tied to visible consumption—cars, electronics, travel—even as income gains have slowed. As a result, Malaysians have resorted to credit: the ratio of household debt to GDP has remained stubbornly high, and many families borrow simply to make ends meet, not just to invest in property or education. High household debt poses a profound danger to both individual livelihoods and the broader national economy. When families become overleveraged, a significant portion of their income is redirected to servicing debt, leaving little room for savings, consumption, or investment in education, healthcare, and long-term security. This weakens domestic demand, especially in emerging economies like those in Asean, where consumption is increasingly vital to growth. Over time, households may become vulnerable to interest rate hikes or sudden job losses, which can trigger a cascade of defaults. This, in turn, affects banks' balance sheets and credit availability—creating a vicious cycle of financial distress and economic contraction. High levels of debt also lead to greater social stress, contributing to mental health challenges, rising family disputes, and increased vulnerability to scams, as desperate individuals may seek quick fixes to financial burdens. In the digital age, cybercriminals exploit this desperation, drawing victims into fraudulent investment schemes or illegal lending traps. Furthermore, high household indebtedness limits the government's ability to stimulate the economy during downturns. When too many citizens are financially fragile, even cash handouts or tax rebates are used to repay debts rather than revive economic activity. Left unchecked, household debt becomes not just a private burden but a public risk. The consequences: Why soaring household debt is dangerous If Malaysia's household debt remains unchecked, what risks emerge? • Financial Instability: A high overall debt load amplifies the risk of loan defaults during downturns or rate hikes. Stress-test results show high-DSR households are especially exposed during economic shocks. • Stagnating Upward Mobility: Heavily indebted families have less ability to save for education, healthcare, or retirement, threatening intergenerational mobility. • Growing Inequality: Debt-servicing requirements hit the less affluent hardest, as wealthier Malaysians benefit from lower interest rates and greater collateral. • Weaker Economic Recovery: With nearly RM1.63 trillion in total household debt in 2024, a large share of income flows to debt repayment, squeezing future consumption and potentially slowing national recovery from economic shocks. • Potential for Social Unrest: Persistent financial distress among large swathes of the population can accelerate social and political dissatisfaction. Responding to the crisis 1. Restore high-quality job growth Stimulate advanced manufacturing, green technology, and high-value services to generate better-paying, more stable jobs. Encourage policies supporting productivity and innovation rather than mere consumption. 2. Promote responsible credit practices Maintain and update lending standards; monitor DSRs rigorously, especially among new borrowers. Improve public awareness of the risks of excessive debt. 3. Strengthen social safety nets and financial literacy Expand targeted welfare and emergency savings supports, especially for high-DSR and low-income households. Continue nationwide financial education to help citizens plan better and understand the long-term costs of debt. 4. Data-Driven Policymaking Use micro-level borrower and sectoral data to tailor macroprudential measures, avoiding 'one size fits all' restrictions that can hurt lower-risk borrowers. Conclusion South-east Asia's, and especially Malaysia's, household debt predicament is not the result of individual irresponsibility alone. It is deeply tied to deindustrialisation, job precarity, and the easy availability of credit—amplified by evolving consumption norms. While prudent lending has insulated the overall financial system thus far, the proliferation of high-DSR borrowers is a warning sign. Bold, targeted action—from rebuilding the foundations of stable employment to stricter but nuanced credit oversight—is crucial to ensure Malaysia's development remains both inclusive and sustainable, rather than an illusion built on borrowed time. *This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.
CBS News
18-07-2025
- Business
- CBS News
$20,000 long-term CD vs. $20,000 money market account: Which earns more interest now?
In today's evolving economic landscape, when inflation is rising again, high interest rates remain on pause and the costs of everyday expenses are elevated, maintaining access to the money you have painstakingly saved remains a top priority. And, put simply, a certificate of deposit (CD) account doesn't offer that flexibility. They do, however, come with high interest rates now, but those rates will need to be earned by keeping your funds untouched in the account until it matures. Take out the money prematurely, and you'll get hit with an early withdrawal penalty. That scenario becomes more likely with a long-term CD, which comes with terms ranging from 18 months to multiple years. A money market account, on the other hand, comes with similarly high rates and the flexibility that a CD account does not. Some money market accounts will even offer check-writing features for account holders. So, on the surface, it seems that a money market account would be the logical place to store your money now, particularly when looking for a home for a large, five-figure amount like $20,000. Before getting started, however, it's critical to consider the interest-earning potential each account type offers. Between a $20,000 long-term CD and a $20,000 money market account, which would earn more interest right now? Below, we'll do the math. See how much more money you could be earning with a high-rate CD account here. CD interest rates, as noted above, are fixed and will remain the same for the CD account's full term, even if the rate climate changes during that period. Money market account rates, on the other hand, are variable and expected to change over time, particularly over a multiple-year period. In other words, calculating the interest earnings of a CD is simple to do with precision, but impossible to do with a changing money market account rate. Here, then, is what a $20,000 deposit into both account types can earn now tied to current rates, assuming no early withdrawal penalties are applied to the CD and that the money market account rate remains constant: In each of these four instances, the money market account earns more interest. And the difference becomes starker over time, with the 5-year option earning more than $140 compared to the CD account. But this is all calculated on the assumption that today's rates will be the same in July 2030, which they almost assuredly will not. The rate climate has changed dramatically since July 2020 and could change in unexpected ways in the years to come. Savers, then, will need to answer one primary question: Does the lower but guaranteed interest they can earn with a $20,000 long-term CD outweigh the potentially bigger returns they can get with a money market account? For many, the long-term CD will be the safer (and more lucrative) option. Compare your current long-term CD rate offers here to learn more. A $20,000 money market account will earn more than a $20,000 long-term CD on the assumption that the former account's interest rates remain the same for years to come, which is highly unlikely. Savers should carefully consider both options before getting started. It likely took a long time to build up $20,000 in your savings, so take a bit more time to do your research and calculate your interest-earning possibilities to better determine where to move it next.
Yahoo
18-07-2025
- Business
- Yahoo
How rising living costs are changing the way we date, live and love
If it feels like rising prices are affecting your dating life or friendships, you're not imagining it. Around the world, economic pressures are taking a significant toll on personal relationships. From strained romantic partnerships to postponed life milestones, financial uncertainty is changing the way people connect and relate to with one another. Young adults in their 20s and 30s, in particular, are facing an altered social landscape where even the most fundamental aspects of relationships are being influenced by financial realities. Dating today can feel like a mix of endless swipes, red flags and shifting expectations. From decoding mixed signals to balancing independence with intimacy, relationships in your 20s and 30s come with unique challenges. Love IRL is the latest series from Quarter Life that explores it all. These research-backed articles break down the complexities of modern love to help you build meaningful connections, no matter your relationship status. Financial stress and relationship strain Money has long been one of the biggest sources of conflict in relationships, but today's economic landscape has made financial stress an even greater burden. In Canada, a staggering 77 per cent of couples report financial strain, and 62 per cent say they argue over money. The rising cost of rent, food and everyday expenses has forced many couples to make difficult financial decisions, sometimes at the expense of their relationship. These concerns are not unique to Canadian couples. A study in the United Kingdom found that 38 per cent of people in a relationship admit to having a secret account or 'money stashed away' that their partner doesn't know about. And in the United States, couples surveyed reported having 58 money-related arguments per year. Even more concerning, financial instability is affecting how long relationships last. A recent RBC poll found 55 per cent of Canadians feel they need to be in a relationship to afford their lifestyle. The economic barriers to independence are particularly pronounced for those contemplating separation or divorce. Traditionally, a breakup meant one partner moving out, but now more divorced and separated couples are finding themselves cohabitating simply because they can't afford to live alone. Understanding how to maintain a healthy relationship when facing financial troubles is essential for couples to navigate these difficult times. Postponing major life decisions The cost-of-living crisis is also delaying key life milestones for young adults worldwide. A Statistics Canada survey found that 38 per cent of young adults have postponed moving out due to economic uncertainty, an increase from 32 per cent in 2018. This issue is not only delaying the journey to independent adulthood, it is also reversing it. For example, in the United Kingdom, one in five young adults who moved out have had to move back into their family home due to the cost of living crisis. Housing affordability plays a major role in these delays. With housing prices soaring in Canada, the U.S., the U.K. and elsewhere, home ownership feels out of reach for many. For instance, 55 per cent of young Canadians report the housing crisis is fuelling their decision to delay starting a family. These delays have cascading effects on individuals and on broader societal trends, including lower fertility rates and shifts toward smaller families. Dating in a cost-conscious era One side effect of the rising cost of living is that couples are moving in together sooner than they might have otherwise in order to split living expenses. Others are adopting a more pragmatic approach to dating and bringing up topics like financial stability, job security and housing much earlier in their relationships. A dating trend known as 'future-proofing' is also spreading. According to Bumble's annual trend report, 95 per cent of singles say their worries about the future are impacting who they date and how they approach relationships. Top concerns include finances, job security, housing and climate change. Read more: At the same time, financial strain is leading to simpler and cheaper date nights. More than half of Canadians say the rising cost of living is affecting dating. Many people are opting for budget-friendly activities like coffee dates, picnics or home-cooked meals instead of expensive dinners or weekend getaways. In the U.K., inflation and other day-to-day expenses have also made 33 per cent of the nation's young singles less likely to go on dates. Around one-quarter of them say it has made them less likely to seek out a romantic partner altogether. These costs are forcing single Americans to adjust their dating plans. With 44 per cent of single Americans reporting adjusting a date for financial reasons, and 27 per cent outright cancelling plans due to financial pressures, it is clear that the cost of living is fundamentally changing how Americans date. Also, with 38 per cent of dating Canadians saying the costs associated with dating have negatively impacted their ability to reach their financial goals, some are even skipping dating altogether. The cost of friendship Friendships, too, are feeling the pinch. Gone are the days of casually grabbing dinner or catching a concert on the weekend. Nearly 40 per cent of Canadians, 42 per cent of Britons and 37 per cent of Americans have cut back on social outings due to financial constraints. While this may seem like a small sacrifice, the decline in social interactions carries serious consequences. Regular social engagement is critical for mental health, resilience and career development. The more social activities are reduced, the greater the risk of loneliness and isolation — two factors that can significantly impact emotional well-being. For many, socializing now means opting for budget-friendly alternatives. However, even with creative adjustments, financial pressures are making it harder to maintain strong social ties. The changing landscape of connection If you're in your 20s or 30s, you've probably felt the way the economic realities of today are reshaping what relationships look like. Rising costs are influencing everything, from who you live with, how you date and when — or if — you take major life steps. Maybe you've moved in with a partner sooner than planned to split rent, swapped nights out for budget-friendly hangs or put off milestones like starting a family. You're not alone. Financial pressures are redefining how we connect with each other. Finding ways to maintain strong relationships under economic stress is essential. Research shows providing emotional support to your partner, employing positive problem-solving skills and engaging in open communication are key maintaining high-quality relationships. This article is republished from The Conversation, a nonprofit, independent news organisation bringing you facts and trustworthy analysis to help you make sense of our complex world. It was written by: Melise Panetta, Wilfrid Laurier University Read more: Love in the age of conspiracy: 5 tips to deal with disinformation and political polarization in relationships How embracing the cringe can help your dating life How to cope with romantic rejection – a psychologist's advice Melise Panetta does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
CBS News
14-07-2025
- Business
- CBS News
$5,000 long-term CD vs. $5,000 short-term CD: Which earns more interest now?
With interest rates remaining elevated in today's economic landscape, certificates of deposit (CDs) continue to be an attractive option for savers looking to park their cash in an interest-bearing account. At today's rates, the returns on the money deposited in a CD account could be hefty, after all, but you'll need to choose the right account — and the right CD term — to maximize what you can earn in interest. And, if you're trying to decide between a long-term CD or a short-term CD, the choice may not be as straightforward as it seems. Short-term CD rates have been higher than normal in recent months, often outpacing their long-term counterparts, meaning that they appear, at least on the surface, to be a better bet. But today's issues with economic uncertainty, coupled with the possibility of Federal Reserve rate cuts later this year, have left savers wondering whether to lock in today's rates for the long haul or stick with a shorter term in case rates climb again. So, which one makes more sense if you're depositing $5,000 now? The answer to that question depends on more than just CD APYs. To help you make an informed decision, let's compare today's rates and calculate how much interest $5,000 would earn in both long- and short-term CDs right now. . $5,000 long-term CD vs. $5,000 short-term CD: Which earns more interest now? Calculating CD interest earnings is straightforward thanks to the fixed-rate structure this type of account offers. However, current market conditions have created an unusual situation where short-term CD rates are moderately higher than long-term alternatives — a departure from historical norms. Here's what each option could earn if you were to deposit $5,000 now (assuming there are no fees or early withdrawal penalties to account for): Long-term CDs: $5,000 18-month CD at 4.26%: $322.88 for a total of $5,322.88 $5,000 2-year CD at 4.20%: $428.82 for a total of $5,428.82 $5,000 3-year CD at 4.25%: $664.98 for a total of $5,664.98 $5,000 5-year CD at 4.20%: $1,141.98 for a total of $6,141.98 Short-term CDs: $5,000 3-month CD at 4.40%: $54.12 for a total of $5,054.12 $5,000 6-month CD at 4.45%: $110.04 for a total of $5,110.04 $5,000 9-month CD at 4.26%: $158.91 for a total of $5,158.91 $5,000 1-year CD at 4.40%: $220.00 for a total of $5,220.00 This comparison reveals a clear pattern: While short-term CDs offer slightly higher interest rates, the extended earning period of long-term CDs results in substantially greater total returns. The highest-earning short-term option generates $220 in interest over one year, while the best long-term CD produces $1,141 over five years, or nearly five times the return. This impressive difference underscores the power of compound time in fixed-income investments. Explore your CD account options and lock in a top rate now. Why your CD term length matters now The reason short-term CDs are so competitive right now comes down to economic conditions. With the Fed signaling potential rate cuts later this year, banks are offering higher yields on shorter maturities to attract deposits while hedging against future declines in borrowing costs. That dynamic flips the usual script, where long-term CDs traditionally come with much higher rates. As a result, choosing a shorter term in today's rate and economic environment can help you preserve flexibility, allowing you to reinvest later if rates rise or shift your strategy entirely if necessary. On the other hand, if you believe rates are likely to drop in the near future, locking in a long-term CD now could be a smart way to secure today's high yields before they disappear. Just be aware that accessing your CD funds before the account has matured could trigger penalties that eat into your earnings. The bottom line If your main priority is earning the most interest possible and you don't need access to your cash anytime soon, a long-term CD delivers the biggest overall return. On $5,000, you could earn between about $323 and $1,142, depending on the CD term and the rate you secure. But if flexibility matters or you want to wait and see where rates head next, a short-term CD could be the better fit. With APYs hovering near 4.4% for 6- to 12-month terms, you'll still earn solid interest on a shorter CD term — and have the option to reinvest when the CD matures. Whichever route you choose, though, it's important to act sooner rather than later. If rate cuts materialize this year as many economists expect, today's top CD yields may not stick around for long.
Gizmodo
09-07-2025
- Automotive
- Gizmodo
Ford Just Made It a Lot Easier to Buy a Car This Summer
On the surface, Ford's latest announcement is a fantastic deal for car buyers. The company is retiring its 'employee pricing for all' campaign and rolling out an aggressive 'Zero, Zero, Zero' summer sales event: zero down payment, zero percent interest for 48 months, and zero payments for the first 90 days. It's a tempting offer, but when you look closer at the economic landscape, it starts to look less like a confident summer promotion and more like a defensive maneuver against a gathering storm. The automaker's new 'zero down, zero interest' is a calculated response to economically stressed consumers and the looming expiration of the $7,500 EV tax credit. Ford says it's responding to customers who, squeezed by higher mortgage rates and travel costs, want to buy a new car without a hefty upfront payment. 'Many families have seen their savings go toward higher mortgage rates and summer travel costs,' Rob Kaffl, who is director, U.S. sales and dealer relations said in a blog post.. 'They want a new vehicle but also want options that allow them to forgo an upfront down payment.' Data from the Federal Reserve Bank of New York's latest Q1 2025 Household Debt and Credit report paints a stark picture. Total auto loan debt in the U.S. has swelled to $1.64 trillion. More importantly, the rate of serious delinquencies—loans 90 or more days past due—has climbed to 2.94%. While this figure has stabilized recently, it remains elevated, signaling that a significant number of Americans are struggling to make their car payments. For many, a down payment is no longer feasible, and with average new car loan rates still high, a zero percent interest offer is a massive financial relief. The Great American EV Fire Sale Is About to Begin Ford wants to lure cash-strapped buyers for gas-powered F-150s and Broncos. But there's a second, more urgent deadline that may be fueling this fire sale: the EV tax cliff. The hugely popular $7,500 federal tax credit for new electric vehicles is set to expire permanently on September 30. After that date, the single biggest government incentive for buying an EV vanishes overnight. This creates a massive sense of urgency for automakers like Ford to sell their current inventory of electric vehicles, like the Mustang Mach-E and F-150 Lightning, before they effectively become $7,500 more expensive to the consumer on October 1. While Ford celebrated strong overall Q2 sales, a closer look at industry data reveals a telling weakness: sales of its fully electric models have been declining. The company's growth is being propped up by gas and hybrid trucks, not the EVs that are about to lose their biggest selling point. Latest Sales Data Reveal Clear Winners And Losers in a Messy EV Market By extending its 'Ford Power Promise' and rolling it into this new zero percent financing deal, Ford is essentially sounding an alarm bell. The company is telling potential EV buyers that this is their last, best chance to get a deal before the market fundamentally changes. It's an aggressive attempt to clear out EV inventory and lock in sales from anxious consumers before a challenging economic climate and the end of government subsidies create a perfect storm for the auto industry.
